“We are past the point where being a capitalist is the only way of becoming a politician, and we are dangerously near the point where being a politician is much the quickest way of becoming a capitalist.”
—G. K. Chesterton
What for most married men would seem an indelicate travel arrangement—cruising across the Atlantic with his wife and mistress—seemed nothing more than a cozy accommodation for Joe Kennedy aboard the steam-driven ocean liner, the SS Europa. Departing New York Harbor in late September 1933, the Kennedy entourage included his wife, Rose; his latest flame, Kay Halle; and his namesake eldest son, Joseph Jr. He also brought along the lynchpin for his newest deal, James Roosevelt, the American president’s oldest son. Before leaving, Jimmy, as he preferred to be called, had told the press that “his trip was primarily for pleasure, but that he hoped to combine some business with it.”
Ever the opportunist, Kennedy also planned to mix business and pleasure. His ultimate prize would be to gain the British rights to send Scotch whiskey, gin, and other imported liquors to a thirsty United States, now that Prohibition appeared almost over. As part of his secret strategy, Joe had enlisted the president’s 25-year-old son to help organize a private visit with Winston Churchill that underlined Kennedy’s clout with the new administration. In their own ways, Jimmy and Kay impressed upon Churchill the importance of Joe Kennedy, which led to a memorable visit at Churchill’s Chartwell home.
Churchill, by position and disposition, was a naturally ally for Joe Kennedy’s plan to profit from the liquor trade. By September 26, 1933, the day he and the president’s son left for Britain, Kennedy had created a new firm called Somerset Importers (apparently named for Boston’s WASPy Somerset Club, which kept Irishmen like him from joining) with an initial $118,000 investment. Somerset became his piggy bank for cashing in on Prohibition’s demise. On this cross-Atlantic boat ride, Kennedy carried with him the letter from Seton Porter, of National Distillers Products Corp., appointing Somerset exclusive sales agent in New England for its liquor products.
When they arrived in London, Joe complained to Kay Halle, a Churchill family friend, that they needed to meet with “the very best people” during their stay. Most historians have focused on Churchill’s chat with Jimmy Roosevelt, without considering Joe Kennedy’s presence. But years later, in the early 1960s, Randolph Churchill, Winston’s son, insisted Joe Kennedy came to Chartwell with the rest of the Americans, including Kay Halle and Jimmy Roosevelt. Randolph told New York Times columnist C. L. Sulzberger that he didn’t know the purpose for this 1933 expedition underwritten by Kennedy, but quickly found out. Kennedy “assure[d] them Prohibition would shortly end and he wished to line up contracts to represent the best firms,” Randolph said. As a top fundraiser, Kennedy claimed he gave fifty thousand dollars to the 1932 Roosevelt campaign, Randolph recalled, and the presence of Jimmy Roosevelt on this trip seemed to underscore that point.
Ultimately, Joe Kennedy pulled off an international coup that made him even richer. He landed the lucrative British importation rights to distribute Haig & Haig Scotch whiskey, Dewar’s, Gordon’s gin, and other imported drinks, all very desirable to customers in the no-longer-dry United States. When Prohibition finally ended two months later, in December 1933, Kennedy seized his chance. With this new arrangement, Somerset saw its business in the United States soar, selling 150,000 cases of Scotch whiskey in the first full year. “We have done surprisingly well with contracts,” Joe wrote his oldest son. By the end of 1934, National Distillers Products Corp., including its New England franchise run by Kennedy, declared that its net profits had quadrupled in a year. When he sold the Somerset franchise a decade later, Joe Kennedy earned $8.5 million (the equivalent of more than $100 million in today’s currency).
Another set of finances surrounding this trip involved Winston Churchill. In September 1933, as the Kennedy group prepared to leave for London, Winston began a series of stock investments in two seemingly obscure American firms tied directly to Joe Kennedy: Brooklyn Manhattan Transit and National Distillers Products Corp. These Churchill stock investments were clustered around the Kennedy trip—executed both shortly before the Chartwell visit and in the months afterward—and were known only to a few, perhaps not even to Randolph. Where Winston got the money for such investments is not clear from available documents. On their face, however, these transactions seemed remarkably risky for a man who had lost much of his fortune in bad investments, who feared he might lose his beloved home, debt-ridden Chartwell Manor, and who had previously relied on friends to bail him out financially.
Winston’s involvement with the American liquor industry emerged shortly after Kennedy began selling British whiskey, archival records show. In March 1934, Churchill was able to invest $5,850 (approximately $101,000 in today’s currency) in National Distillers Products Corp. – the same American company that awarded its New England franchise to Joe Kennedy. Later that year, Winston managed to buy some more of the same stock for $4,375 (about $76,000 in today’s currency).
Soon after both purchases, Winston sold his National Distillers stock, earning a neat little profit, records show. The paperwork for these transactions was handled by the Vickers da Costa brokerage firm, which included Churchill’s brother, Jack, as a stock broker and partner.
Winston’s stake in BMT—the private New York City subway line associated with Kennedy, Baruch, and others in their speculative investment “pool”—was even greater and proved more complex. In the two weeks before Kennedy left for England, September 11–26, 1933, Winston repeatedly bought BMT in batches of 100 shares for a total purchase of $21,725 (approximately $380,000 in today’s currency). Records show no other BMT exchanges for Churchill for another ten days, not until after the visit of the Kennedy entourage to Chartwell. The following day, however, Winston started cashing out. He quickly sold about two-thirds of this stock by October 11, 1933, making a substantial 10 percent profit within just a month of his investment.
The idea for Winston’s BMT stock transaction apparently came from Kennedy’s friend and business associate Bernard Baruch. “I bought seven hundred Brooklyn Manhattan T around 30, sold four hundred around 35, and am sitting on three hundred,” Winston wrote to Baruch on October 15, 1933, shortly after entertaining his American visitors at Chartwell. “Many thanks for the fruitful suggestion.”
Baruch, Kennedy and other “pool” speculators involved in BMT expected their shares of private stock would boom if the subway company were merged into New York City’s overall system. Back and forth throughout 1934, Winston sold and bought BMT stock, at least some of which was purchased on margin with the hope that it would go up. The amount was much more than Winston previously said he’d ever invest on Wall Street. In the months surrounding the Chartwell visit, Churchill managed to purchase a total of more than $82,000 in BMT stock (about $1.4 million in today’s currency) and sold a total of some $72,000, according to available archival records. The BMT collection was among the biggest in his portfolio, which included a handful of other stocks in 1934. It also far exceeded the overall $12,000 that Churchill told his brother he was willing to wager in low-risk American overseas investments, particularly after losing a bundle in the 1929 Wall Street crash. “The more I study the stocks I know about,” he advised Jack’s brokerage firm prudently in 1931, “the more sure I am that the only way to recover the losses is to acquire some low priced solid securities without reference to any immediate dividends, and then put them away for two, three or four years.”
Quite the contrary, Churchill’s large stake in BMT stock posed a tremendous risk and broke every sensible rule of investing—unless someone had promised him it’d be a sure bet. Increasingly, this risky stake in one stock left Winston worrying that his anticipated bonanza might never happen. On November 18, 1933, he cabled Baruch: do you still like bwt [sic] kindest regards winston.
Baruch, like most speculators in discussing stocks, didn’t leave much documentation. His telegram contained a one-word reply: yes.
Over the next year, Winston’s anxious messages continued, as the situation surrounding BMT became only murkier. He wondered whether to cash out. are you still pleased with b.m.t. around forty regard [sic] winston, he cabled Baruch on October 27, 1934. That same day, he dropped a personal note to his brother, Jack, about his stock account. “I telegraphed Baruch about Brooklyn,” he wrote, assuring Jack that he expected to make more money from his investments in the following year. But Baruch’s telegram reply was decidedly mixed: while disappointed delayed transit consolidation feel brooklyn comparatively best thing on list although affected by politico economic situation. bernie.
Increasingly, the BMT investment by Kennedy and Baruch would come under greater scrutiny. Their dream of a big payday soon evaporated. Instead of a rapid merger that would dramatically increase the stock’s value, the BMT took years to be unified into a citywide system under municipal ownership. While Joe’s initial half-million-dollar stake swiftly doubled in value, it is not clear how much he finally earned. Most biographers say Joe Kennedy lost money in the BMT investment, and presumably so did his partners.
How Churchill obtained money to invest in these two American stocks so intricately linked to Joe Kennedy’s quick-hit investment strategy remained part of the overall mystery shrouding this 1933 trip to Great Britain and its lucrative alcohol deals. Winston’s subsequent note of thanks to Baruch about BMT suggests Kennedy’s pal helped orchestrate the buying of this particular stock. For much of his career, Churchill — unencumbered by stock disclosure rules and ethical “pay to play” restrictions that regulate much of twenty-first-century government — wasn’t inclined to refuse the helping hand of a friend. Earlier, in 1929, Baruch provided money to Churchill when the latter nearly lost his fortune in Wall Street’s crash.
But how Churchill learned of National Distillers Products Corp. seems unlikely to have been divined from any other source than Kennedy and his circle of associates. Shortly after this trip, records show, Churchill also managed in June 1934 to buy shares in the distilling company of Sir James Calder—another of Kennedy’s business partners, who provided Haig & Haig whiskey—which Winston soon disposed of at a slight loss.
For a time, Jimmy Roosevelt’s role in Kennedy’s British venture would remain hidden. Rather than sell booze directly as Joe’s business partner, Jimmy and his insurance firm made a bundle by safeguarding the ships and their cargo of Scotch whiskey and other liquors delivered from Great Britain. Jimmy’s tax disclosures showed that his income more than doubled—from $21,714 in 1933 to $49,167 in 1934 (about $850,000 in today’s currency), a huge sum during the teeth of the Depression.
Emboldened by his coup in London with Kennedy, Jimmy Roosevelt came home bragging about nabbing the National Distillers account. He tried a similar strong-arm tactic with a Boston bank president, who learned that government checks would be pulled from his bank unless young Roosevelt handled its insurance coverage. “Your son James, engaged in the insurance business, is diverting accounts to himself from old established Insurance Brokers on the strength of not only the name of Roosevelt but implication that obtaining such business, favors will be granted by the administration,” warned J. Henry Neale, a lawyer and banker who supported FDR. “This is said particularly to apply to National Distillers’ account.” After the White House received Neale’s private letter about this “malicious rumor,” the president demanded an answer from his son.
In an August 28, 1934, “Dear Pa” letter sent to the President Roosevelt’s private home in Hyde Park, New York, Jimmy apparently disclosed to his father his deal with the Kennedy-connected firm for the first time. “You wanted a statement of facts as to the National Distillers,” he acknowledged. “It is true that I have this account, but I can’t understand why I shouldn’t have it.” Jimmy’s two-page letter explained how he had approached Seton Porter of National Distillers, seeking his firm’s insurance contracts, after he “got the idea prior to the repeal of Prohibition that when this was accomplished, the liquor industry would need to make some changes in the way of insurance.”
Jimmy didn’t mention Joe Kennedy’s name, but he probably didn’t have to. He described Seton Porter, Joe Kennedy’s partner in the liquor business, as his own good friend. “I think Mr. Porter would be willing to say that I have his insurance solely on the basis of merit, and I would only want it on that basis,” Jimmy promised his father. “Also, I have never tried to do anything for them with the Administration and never will. Mr. Porter understands that completely, as I think he told you when he saw you” at the White House.
Jimmy seemed clueless about the political embarrassment the British liquor deal might cause his father if it became public. In enlisting the president’s son as his ally, however, Joe Kennedy displayed more than financial acumen. With a rapier instinct, Joe could spot the fault lines in Franklin Roosevelt’s personal life—in this case, the complex relationship between a great man and his son—and exploited them for his own purposes, all under the guise of friendship. Kennedy even described himself as “foster-father” to Jimmy, a young man only a few years older than his own son Joe Jr.
“You know I’m still cutting my teeth in a business way,” Jimmy wrote gratefully to Kennedy in 1933, around the time of their British trip. The president’s eldest son expressed his determination to follow through “with these big concerns” and show that he didn’t have to rely “on the old man’s reputation and have no guts of my own.” In this deal, young Roosevelt agreed to Kennedy’s wishes, naively and greedily, with the expectation of more benefits to come.
Ultimately, the secrecy surrounding Kennedy’s 1933 trip obscured the origins of his relationship with Winston Churchill. Most historians say it began later in the decade — when Kennedy became FDR’s ambassador in London in 1938 — and was acrimonious almost from the start over differences leading to World War II. However, earlier documents showing the two men’s shared friendship with Bernard Baruch, their contacts with Kay Halle and the Roosevelts, their political ambitions for profitable relations between their two countries, and their stake in two companies involved in Kennedy’s business empire suggest a kindly alliance between them. Certainly in private, Joe gave the impression that he had a friend in Winston Churchill.
Only a few seemed to know of these initial friendly Churchill-Kennedy exchanges before everything changed so dramatically. Joe’s granddaughter Amanda, in her 2001 collection of his letters, noted that Churchill “had been one of his earliest British political contacts, and had even suggested Kennedy’s name for an award celebrating freedom and peace” in 1938. One of Joe’s few trusted confidants, James A. Fayne, a Kennedy man in business and government, declared that Joe’s “greatest friend in Europe” was Winston Churchill. “Before Mr. Kennedy was appointed Ambassador, his chief world contact was highly personal though it was Churchill,” recalled Fayne in 1968, “. . . and then they became oceans apart.”
Thomas Maier is the author of When Lions Roar: The Churchills and the Kennedys, as well as four other books, including The Kennedys: America’s Emerald Kings and Masters of Sex, the basis for the Showtime series.
Excerpted from the book When Lions Roar by Thomas Maier. Copyright © 2014 by Thomas Maier. Excerpted by permission of Crown Publishing, a division of Penguin Random House. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.